Many people choose to trade in a car because it is very convenient and easy. Dealers want your trade-in, so they make the entire procedure as simple as can be. This type of trade occurs the same day as you buy the car. The dealer will determine the trade-in value and then subtract this from the purchase of the new car.
Find Your Used Car Value
To ensure you get the best trade-in value possible, you should know the value of your car before you go to the dealer. There are many pricing guides that will give you a good idea of the market value. These guides factor in the model, age, mileage, and the condition of the car to provide you a value. If you are not sure what category your car fits into, see about getting it appraised. If you have an appraisal form, make sure you take it with you to the dealer.
Perform the Easy Fixes
Before you trade it in, see about fixing any issues that affect the value. These fixes may be small and easy, but they can add significant value to the price. Remove visible rust and clean the interior. Make sure to vacuum the carpets and floor mats. Thoroughly wash and wax the exterior. Do not worry about any major repairs.
The dealer will look over the car and speak with a manager before presenting you with an estimated value. This offer is normally much less than the value or price you could get if you sold the car yourself. If you have an appraisal, then present this to try and negotiate for a better price. If you cannot reach a good amount, then you may have to take the lower value or decide to sell the car yourself.
Apply the Trade-In to the New Car
The trade-in value will then be applied to the balance of the new car you are purchasing. To get the most from your trade-in, try to keep the two negotiations separate. First negotiate for the price of the car, then for the price of the trade-in. Once you have agreed upon those prices, let the dealer know you want to apply the trade-in value to your new car purchase. It is important to be realistic, as you will rarely get the market value. However you also do not want to be scammed and take a ridiculously low trade-in amount.
Calculate Your Sales Tax Benefit
You can get a substantial tax benefit from trading in your vehicle. Normally the tax is calculated on the final payment price, so if your trade in is worth $5,000 and your new car is worth $15,000, you will only pay tax on $10,000. You do not get this tax break if you sell the car yourself, and if you and the dealer are haggling over a hundred dollars, think about what you save by trading in when applied to the sales tax.
5 Reasons to Trade in a Car
There are many reasons to trade in a car.
- It's relatively hassle-free.By trading in a car, you avoid the hassle of selling it privately. You don't have to spend money on advertising your vehicle or display your personal telephone number or email address in a publicly-communicated forum. All that is required when trading in a car is a willingness to accept the dealership's offering price
- The transaction is more timely.When a car is brought to a dealership for trade, the dealer will purchase it from you the same day. You do not have to wait days, weeks or months to unload an unwanted vehicle. Instead, the dealer will evaluate it, do a quick test-drive, and make an offer on the spot. You can decide to accept the dealer's offer or negotiate for a higher price. Either way, the deal will be completed much quicker than if the car was being sold through a private party channel
- The previous owner has less responsibilty.Selling a car privately exposes you to potential liability if anything goes wrong with the vehicle a short time after selling it. Even though most privately sold cars are sold "as is," buyers have demanded financial assistance from sellers for unexpected mechanical repairs. In certain instances, buyers have even taken private party sellers to court in an attempt to acquire a legal judgment in their favor. When a vehicle is traded in, the dealership immediately assumes all responsibility for the car. If the car is resold and experiences mechanical failure, the buyer will pursue the dealership for financial assistance
- Trade-ins can help with a bad loans.Under most circumstances, dealerships will take any vehicle in a trade. This includes vehicles where the owner is upside-down in the loan. A loan is considered upside-down when the car is worth less than the owner owes on it. Regardless of the amount owed, dealerships will pay off the loan when a financed vehicle is traded in. Of course, the previous owner is responsible for any loan balance above and beyond the trade-in price of the car. Instead of forcing the seller to pay the difference, most dealers will simply add the difference to the new loan balance
- The loan balance on a new car might be reduced. If you owns a vehicle outright or have positive equity in it, trading in a car will net you cash at the end of the transaction. If this cash is applied to the purchase price of the financed new vehicle, it will reduce the loan balance. A reduced loan balance directly equals a lower monthly payment
Standard Trade-In Values Based on Year, Make and Model
The standard trade-in values based on year and make can be found on sites such as Kelly Blue Book. Kelly Blue Book provides valuations for used cars, based on the year of the car, the type of vehicle being traded in, the manufacturer and the condition of the vehicle.
- 1999 Acura Integra.Excellent condition value: $3,760; average condition value: $3,020; rough condition value: $1,207
- 2001 Acura Integra. Excellent condition value: $5,071; average condition value: $4,179; rough condition value: $2,056
- 1997 Audi A6.Excellent condition value: $3,130; average condition value: $2,078; rough condition value: $525
- 2001 Audi Allroad.Excellent condition value: $6,960; average condition value: $5,178; rough condition value: $2,096
- 2005 Audi S4.Excellent condition value: $20,706; average condition value: $18,142; rough condition value: $12,305
- 2005 Audi TT. Excellent condition value: $15,756; average condition value: $13,832; rough condition value: $9,625
- 2003 BMW X5.Excellent condition value: $16,206; average condition value: $13,748; rough condition value: $8,398
- 2007 BMW X3. Excellent condition value: $25,289; average condition value: $23,175; rough condition value: $17,570
- 1995 Buick Regal.Excellent condition value: $1,901; average condition value: $1,571; rough condition value: $529
- 2005 Buick Century. Excellent condition value: $5,866; average condition value: $4,452; rough condition value: $2,175
- 1998 Cadillac Seville.Excellent condition value: $3,422; average condition value: $2,688; rough condition value: $684
- 2001 Cadillac Deville. Excellent condition value: $6,450; average condition value: $4,768; rough condition value: $1,665
- 1996 Chevrolet Tahoe.Excellent condition value: $4,460; average condition value: $3,433; rough condition value: $1,833
- 2003 Chevrolet Trailblazer.Excellent condition value: $9,797; average condition value: $7,407; rough condition value: $4,596
- 2007 Chevrolet Corvette.Excellent condition value: $36,995; average condition value: $34,322; rough condition value: $27,548
- 2007 Chevrolet Suburban. Excellent condition value: $28,245; average condition value: $24,849; rough condition value: $19,028
- 2000 Chrysler Grand Voyager.Excellent condition value: $3,962; average condition value: $2,482; rough condition value: $1,022
- 2004 Chrysler Sebring.Excellent condition value: $4,505; average condition value: $3,265; rough condition value: $1,269
- 2004 Chrysler Crossfire.Excellent condition value: $8,966; average condition value: $7,222; rough condition value: $4,390
- 2005 Chrysler Town & Country.Excellent condition value: $8,738; average condition value: $6,950; rough condition value: $4,124
- 2006 Chrysler PT Cruiser. Excellent condition value: $8,161; average condition value: $6,590; rough condition value: $4,312
- 1997 Ford Mustang.Excellent condition value: $4,547; average condition value: $3,602; rough condition value: $1,769
- 2005 Ford F-250. Excellent condition value: $14,705; average condition value: $12,054; rough condition value: $7,293
- 1999 Honda Accord.Excellent condition value: $4,234; average condition value: $3,399; rough condition value: $1,489
- 2003 Honda S2000. Excellent condition value: $12,162; average condition value: $10,675; rough condition value: $7,288
- 2005 Toyota Avalon. Excellent condition value: $14,116; average condition value: $12,492; rough condition value: $8,880
Additional trade in values for a specific car that you are interested in selling or trading in can be found on Kelly Blue Book website.
Related Questions and Answers
Did the Cash for Clunkers Program Have an Effect on Used Car Pricing?
"Cash for Clunkers" program had an unforeseen effect that was felt worldwide when it was implemented last summer. The basic program was that if you had a vehicle of a certain vintage that was ready for the bone yard, you might as well use it. In conjunction with government-backed money to buy a new car in order to get the car industries moving again. Well, it did as advertised in the U.S. for about two quarters, but the fallout effect went much further. The "clunkers" program meant a one-way trip to the bone yard or junkyard and the crusher. Prior to this program, at least the better vehicles were available for purchase by people in the U.S. who needed them for transportation. There was further fallout in the wholesale side as the many millions of vehicles that were in good enough shape to be purchased for sale overseas, where each vehicle is basically a cherished commodity, were suddenly gone and people in the developing world were suddenly left without their own "wheels". It didn't matter to these people whether the cars were pretty or even if they were the quickest from the traffic light. What mattered was the ability to move around and be independent. "Clunkers" dried this source up. In what you can call a case of reverse consequence, a market to which people looked for vehicles dried up overnight.
Is the KBB Value of a Used Car the Same Thing as the Trade in Value?
No, the KBB value of a used car is more what you can expect to pay for that used car. The used car value is a guideline of the figure a dealer might ask if they were to sell you the vehicle. For example, if your car has a used car sales value of $22,000, this is not what you will get when you walk into the showroom looking for a trade. You have to look at the trade-in value as the value that the dealership will give you for the given condition of your car. In other words, if your car's trade-in value is $3,000, that's the price you will receive as a trade-in. Although the used car price may be $22,000. That's the price it will sell for, once work has been done on it.